Saturday, 4 October 2014

The European Commission, in signalling its intention to give the green light to the British Government's Hinkley C nuclear power plant deal under the 'state aid' permission procedure has failed miserably to protect British consumers against the consequences of what must be the highly likely outcome of cost overruns in building the Hinkley C plant. Instead it has issued what must be seen as a smokescreen of 'protection' to British electricity consumers by asking the British Government to introduce rules clawing back profits made by EDF. See http://www.reuters.com/article/2014/10/03/eu-britain-edf-nuclear-idUKL6N0RY3FE20141003?irpc=932

Observers might be forgiven for imagining that the 35 year contract for Hinkley C, underpinned by £10 billion of state loan guarantees paying higher premium prices (£92.50) than privately built onshore windfarms receive for only 15 year contracts, will give EDF and their Chinese partners big profits. However this impression is an artefact of the ludicrous propaganda perpetrated for many years that nuclear power stations are potentially profitable, competitive, operations. They are no such thing. Hinkley C is most likely to result in further major commitments being made by British electricity consumers or taxpayers to bail out the near inevitable cost-overruns of building Hinkley C. The fact that only state owned companies (French and Chinese) are prepared to undertake the risk of this project, and even then backed by what will emerge in the fullness of time as an effective blank cheque by the British state, is a testament to the sheer bankruptcy of new nuclear build as a commercial proposition.

The nuclear constructors may set dates for commissioning of the project, but in reality they have no idea when they will be finished. The firm probability is that they will take a lot longer to build the plant than what is said in the wishful thinking that passes for pro-nuclear reports on the subject. All three EPRs (the model being used for Hinkley C) being built in Finland, France and China are acknowledged by the constructors themselves as running considerably behind schedule. And we do not even know whether the plant will work very well when they are switched on!

Assurances that the British consumers will not face any further liabilities for building the plant are politically worthless. Why? because if, on the basis of experience, the plant are not build on time and (thus) cost, then the constructors are very likely to ask the UK Government for more financial support. The British Government is unlikely to say no in such circumstances, whatever the Department of Energy and Climate Change claim today. Are they going to allow a half-built nuclear power station to remain as a monument to British folly, to be mocked by people around the world? No, they will commit British people to spending more money on the project to complete the dinosaur, no doubt backed by a new application to the European Commission for 'state aid', which the EU Commission will be minded to accept (as usual). You think this unlikely? Well, it has happened almost exactly like this before. Sizewell B nuclear power station, using a relatively well known PWR design, was left financially stranded when British electricity industry was privatised in 1990 and the new private electricity industry said they could not finance its completion. The Government responded by levying a 'fossil fuel levy' on electricity consumers to pay for the plant to be completed. Indeed the European Commission went along with this on the condition that the levy ended in 1998.

It is about to start again. So is a new comedy show of building more nuclear power in the UK.

About Me

Dr David Toke is Reader in Energy Politics in the Department of Politics and International Relations in the University of Aberdeen. You can see his profile at http://www.abdn.ac.uk/socsci/people/profiles/d.toke
He has been campaigning on energy issues for around 30 years, and in 1990 his book ‘Green Energy’ was an influential argument in the UK for a non-nuclear approach to dealing with global warming. He was a key player in the campaign to establish feed-in tariffs for small renewable projects in the UK, achieved in 2008. He has consistently argued that the UK's proposed nuclear power programme is not only uneconomic compared to renewable energy, but that it is undeliverable short of one or more governments signing what amounts to a 'blank cheque' to pay for the nuclear power plant. His latest book, published by Routledge is called 'Low Carbon Politics'. He has published many papers in leading political science journals on environmental, especially energy (and renewable energy) issues and he is also a frequent and well cited contributor to the journal 'Energy Policy' published by Elsevier. His twitter address is @DaveToke